You can still consider these distributions safe

Article Excerpt

COVID-19 has hurt cash flow at these two REITs. However, their current distributions look sustainable. DREAM OFFICE REIT $21 is a buy. The REIT (Toronto symbol D.UN; Cyclical-Growth Dividend Payer Portfolio; Manufacturing sector; Units outstanding: 56.5 million; Market cap: $1.2 billion; Dist. yield: 4.8%; Dividend Sustainability Rating: Average; www.dream.ca) launched a three-year strategic initiative in 2016. As part of that plan, it sold roughly 138 properties for $3.7 billion. It used $1.8 billion of the proceeds to pay down its high-interest debt. It also repurchased over $1.1 billion of its outstanding units. The trust now has 30 office properties, including two under development. These properties have a total of 5.5 million square feet of gross leasable area. Also, the highly profitable downtown Toronto market supplies 80% of the REIT’s rental revenue. Its overall occupancy rate as of September 30, 2020, was 88.0%. In July 2017, as part of its strategic plan, Dream cut its monthly distribution by 50.6%, to $0.0833 a unit from $0.125. Since then, it…